Viewpoint: Brace for next waves of audits

An army of auditors is circulating in the healthcare market. Its goal is to recover billions in overcharges, mistakes, and false billing claims. And although the audit threat is considered greatest for hospitals and large physician practices, smaller office-based practices are not insulated.

Intentional fraud by physicians is rare, but errors in coding and billing are common. According to HealthPort's Lori Brocato, who delivered a presentation on mitigating audits by recovery audit contractors (RAC) at this year's Medical Group Management Association (MGMA) annual meeting, "You are only going to see the level of audits grow, and they are continuing to recover a lot of money."

In 2011, it was estimated that the government's Health Care Fraud and Abuse Control Program reeled in close to $4.1 billion. And it has spawned a new public-private partnership to reduce and prevent fraudulent billings. The issue has taken on such urgency that in the past month, presentations were delivered at the annual meetings of both the American Academy of Family Physicians in Philadelphia, Pennsylvania, and the MGMA in San Antonio, Texas.

And the auditing activity doesn't just stop there; the Centers for Medicare and Medicaid Services (CMS) is actively revalidating physicians enrolled in Medicare. Medicaid RAC audits have begun, too. RAC prepayment reviews are slated to begin in August. And physicians still face potential administrative inquiry from auditors from the Office of Inspector General, Medicare administrative contractors, and Medicaid integrity contractors.

Audits are quickly becoming a way of doing business in healthcare, Brocato says. And if your practice is picked, you may want to prepare for a 3-year review for Medicare and a 5-year review for Medicaid. When the Affordable Care Act (ACA) is fully implemented, regulators may be able to go back even further.

Auditors are most interested, she says, in these areas:

medical necessity,

outpatient billing and coding errors,

facility versus non-facility reimbursement,

place of service errors,

duplicate payments, and

missing documentation.

Brocato also offered this advice to prepare for an audit:

1. Gather, track, and manage all audit requests centrally.

2. Check for duplicate audits, and create a process to dispute duplicitous requests.

3. Review and approve records before releasing, and only release what you are legally required to submit.

4. Manage decision and demand letters, and keep detailed notes of any telephone communications with auditors.

5. Appeal wisely, because the process can be costly and takes time to prepare for.

As part of the ACA, providers have 60 days to report and return overpayments. Otherwise, the government regulators consider them false claims.

The auditors are targeting perceived inefficiencies in the system as part of an ongoing attempt to curtail rising costs of healthcare. At the same time, government action is pushing the payment model from volume to value, while simultaneously opening up access to healthcare to more Americans.

When it comes to administrative challenges for office-based physicians, 2013 might shoulder some other financial challenges. Medicare Advantage plans will post reimbursement reductions this year and possibly next. The Medicare program is anticipating a 2% cut in reimbursements to physicians in 2013 as a result of the Budget Control Act's sequestration.

Cost containment, in 2013 and beyond, will be directed at hospitals, facility fees, and other very expensive specialty areas, experts say. And although many associations are actively backing initiatives to push efficiency and reduce costs, the efforts need to stay focused on streamlining the system, not trimming reimbursements further.